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Trio of key surveys show UK in steep downturn
Source: Agencies |
January 13, 2009, Tuesday
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BRITAIN'S economy went into steep decline at the end of last year when consumers tightened their belts, businesses slashed jobs and the housing market ground to a virtual standstill, a trio of surveys showed today.
The figures suggest the economy has entered its deepest recession since at least the 1980s and will add urgency to discussions on fresh policy initiatives to ease the pain of the credit squeeze.
A survey by the British Retail Consortium showed retail sales fell last month at their fastest pace for a month of December since records began 14 years ago.
"December's performance has historically set the scene for the year ahead, so the outlook is indeed bleak," said Helen Dickinson, head of retail at KPMG.
Britain's biggest retailer Tesco reported the smallest rise in Christmas sales at UK stores open for at least a year since the early 1990s.
"Against the overall background of, I suspect, rising unemployment and economic slowdown it will be a tough year," Finance Director Andrew Higginson told Reuters.
Nonetheless, Tesco expects to create around 10,000 jobs in the UK this year, he said in a telephone interview.
A survey from the Royal Institute of Chartered Surveyors, meanwhile, showed the pace of decline in British house prices eased slightly in December, but sales hit a record low and the proportion of unsold houses rose to its highest level since 1992.
British house builder Taylor Wimpey said it built more than a third fewer homes in 2008 compared with 2007. The company said it had 1.55 billion pounds (US$2.32 billion) of debt at the end of last year and it would continue to try to cut costs.
Prime Minister Gordon Brown unveiled a 500 million pound plan yesterday to stop the recession creating an army of long-term unemployed. Further measures on bank lending are expected later this week.
A poll for the Times newspaper showed the prime minister has lost some of the poll boost that followed his handling of the economic crisis last year.
The Populus survey put Brown's ruling Labor Party down two points on last month at 33 percent, with the Conservatives up four points at 43 percent. An election is due by May 2010.
Britain's economy has been particularly hard hit in recent months as banks around the world have reined in lending to repair overextended balance sheets.
The British Chambers of Commerce urged the government to take "additional forceful corrective measures" as it warned that businesses were facing their toughest conditions in more than two decades.
It said its quarterly survey of almost 6,000 firms showed a "frightening deterioration" towards the end of last year as sales, orders, investment, employment expectations, cashflow and confidence deteriorated at the fastest pace since the series began in 1989.
"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate," said David Frost, Director General of the British Chambers of Commerce. "Since October, things have really fallen off a cliff."
The BCC was one of the first groups to forecast a recession last year and the depth and breadth of its survey makes it a closely watched barometer for the economy as a whole.
The Bank of England has already slashed interest rates to an historic low of 1.5 percent from 5 percent last October. Analysts expect rates will fall close to zero in the coming months, shifting attention to what can be done once its conventional monetary ammunition has been used up.
The figures suggest the economy has entered its deepest recession since at least the 1980s and will add urgency to discussions on fresh policy initiatives to ease the pain of the credit squeeze.
A survey by the British Retail Consortium showed retail sales fell last month at their fastest pace for a month of December since records began 14 years ago.
"December's performance has historically set the scene for the year ahead, so the outlook is indeed bleak," said Helen Dickinson, head of retail at KPMG.
Britain's biggest retailer Tesco reported the smallest rise in Christmas sales at UK stores open for at least a year since the early 1990s.
"Against the overall background of, I suspect, rising unemployment and economic slowdown it will be a tough year," Finance Director Andrew Higginson told Reuters.
Nonetheless, Tesco expects to create around 10,000 jobs in the UK this year, he said in a telephone interview.
A survey from the Royal Institute of Chartered Surveyors, meanwhile, showed the pace of decline in British house prices eased slightly in December, but sales hit a record low and the proportion of unsold houses rose to its highest level since 1992.
British house builder Taylor Wimpey said it built more than a third fewer homes in 2008 compared with 2007. The company said it had 1.55 billion pounds (US$2.32 billion) of debt at the end of last year and it would continue to try to cut costs.
Prime Minister Gordon Brown unveiled a 500 million pound plan yesterday to stop the recession creating an army of long-term unemployed. Further measures on bank lending are expected later this week.
A poll for the Times newspaper showed the prime minister has lost some of the poll boost that followed his handling of the economic crisis last year.
The Populus survey put Brown's ruling Labor Party down two points on last month at 33 percent, with the Conservatives up four points at 43 percent. An election is due by May 2010.
Britain's economy has been particularly hard hit in recent months as banks around the world have reined in lending to repair overextended balance sheets.
The British Chambers of Commerce urged the government to take "additional forceful corrective measures" as it warned that businesses were facing their toughest conditions in more than two decades.
It said its quarterly survey of almost 6,000 firms showed a "frightening deterioration" towards the end of last year as sales, orders, investment, employment expectations, cashflow and confidence deteriorated at the fastest pace since the series began in 1989.
"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate," said David Frost, Director General of the British Chambers of Commerce. "Since October, things have really fallen off a cliff."
The BCC was one of the first groups to forecast a recession last year and the depth and breadth of its survey makes it a closely watched barometer for the economy as a whole.
The Bank of England has already slashed interest rates to an historic low of 1.5 percent from 5 percent last October. Analysts expect rates will fall close to zero in the coming months, shifting attention to what can be done once its conventional monetary ammunition has been used up.
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